Getting there from here, part 2

In the previous article, the first two phases of vending technology implementation was discussed. Successful implementation can greatly increase the profitability and efficiency of a vending operation. There are three more phases to discuss as well as how an operator can put the whole process together.

Phase 3: Forecasting

At this point in the progression of technology implementation, pre-roll forecasting is possible with detailed sales data provided via DEX data. Pre-roll forecasting means that the load for the machine is built at the truck, or truck pre-kitting (the next phase focuses on warehouse prekitting.)

Working with historical numbers, truckload and product fill quantities, operators can build and automate forecasts. End of day, truck inventories are minimized, and operators can eliminate the “first walk” for each machine.

By this stage, the role of the driver is certainly changing. Work is now a two-step process: pull products and fill the machine. Manual machine inventories are gone. Drivers need to have the process and discipline to accurately record detailed product fill, inventory and column assignment data. They also need to spend time to make sure all product is in its correct location to ensure data accuracy. Because forecasts better match machine fill requirements, drivers are spending less time servicing machines and reconciling inventories, leading to route consolidation opportunities. This saves in labor and truck costs, and slashes product waste.

Phase 4: Prekitting

Once the pre-roll forecasts have been field-tested and adjusted, operators are ready to start prekitting each driver’s route in the warehouse. This is achieved based on item-level data tracked by machine, product, category, time of day and other factors pertinent to the organization. Pre-kitting is best accomplished by pairing pick-to-light software with the vendor management software (VMS). Pick-to-light systems simplify order fulfillment during the pre-kitting process by using light signals to direct the pre-kitting activities of fulfillment and warehouse personnel. They enable pickers to quickly and easily find the correct bin location by means of LED displays rather than paper along an assembly line. Besides guiding the picker to the exact location, the lights also display the precise amount ordered for each delivery route and the system requires confirmation when each item is picked.

The changes prekitting brings to an organization are extraordinary. Operators can virtually eliminate end of day truck inventories. Decisions are made at a management level rather than on the fly by drivers, and are based on customer preferences and buying habits rather than what inventory is left in the truck. But effective prekitting depends on accurate data and strict processes. DEX-ready machines, handhelds and a VMS are required to read machine data and predict product demand accurately. And all personnel need to be clear on the new processes and be held accountable for following them.

Fleet management takes on a whole new look in the prekitting phase. According to Stu Riemann, general manger of D&R Star Vending of Rochester, Minn., “We all have trucks that break down or need routine maintenance. When that happened in the past, under a rolling inventory system, switching that entire inventory to the spare truck and then back to the original truck was very time-consuming.  Our customers lost out because we were not seeing their stops that day. With pre-kitting, switching from one truck to another is a very quick and painless process.”

Some operations are able to resize their fleet with smaller trucks or further reduce their routes, leading to substantial fuel savings.

Employment costs change as well. Operators can use fewer higher-paid drivers tasked with servicing machines and customers and more lower-cost warehouse workers who can be part-time or students. For D&R Star Vending, the shift to prekitting saved them 5 routes and added 1.5 people to its warehouse payroll. The company also tapped its warehouse staff to fill trucks for the driver, so that the driver can simply grab the truck keys and be on the route first thing in the morning. As a result, the driver is able to service more machines because he or she does not have to worry about ordering or inventorying the truck. And at the end of the day, truck inventories that used to take an hour and produced spotty data now can be done in minutes with accurate counts.

Not to be overlooked is the trash. Prekitting leads to far more cardboard trash in the warehouse, so much so, that some operations like Coca-Cola Bottling Co. United (CCBCU) and Black Tie Services Inc. in Baltimore, Md. invested in a baler to do cardboard recycling. Now instead of paying for two to three dumpsters a week, they are getting cash for their cardboard. It all adds up.

Phase 5: Telemetry

Bringing machines online with telemetry technology is the next logical step. By providing real-time data on product movement, cash inventory and the physical condition of machines, operators can manage routes more profitably and take proactive measures to service and maintain machine health. They are armed with the data needed to optimize scheduling that delivers maximum route and merchandising efficiencies.

Machines with telemeters have been shown to offer a 20 to 40 percent increase in operational efficiencies. In just a few months after implementing telemetry technology, CCBCU pulled dozens of trucks off the street, eliminating 25 percent of its routes. CCBCU has achieved more than $150,000 in savings to date.

And, by analyzing inventory levels, cash in the machine and geographic considerations, the VMS automatically generates the most efficient delivery schedules and pick lists based on real-time, item-level sales data. Warehouse personnel can use this information to load orders for each machine, providing drivers with more time to focus on servicing their routes. Operators have the tools they need to reconcile daily cash collection and capture spoilage and inventory variances.

Also, with telemetry, machines are networked, so it’s easy to add credit/debit card-accepting payment technology. Studies have shown that consumers are more likely to make a purchase when they are given more payment choices.

Even with all these advantages, telemetry is not a universal option. For some machines, DEX-recorded data is sufficient. A survey of machinery in terms of functionality and volume will help determine which machines are the best targets to bring online. Telemeters range from $200 to $400 per machine plus monthly cellular charges on data transmission. If a machine shows stable sales from month to month, then simple forecasting may be more than adequate. Other machines may not generate a significant number of alarms to warrant live monitoring via telemetry.

Getting there from here

Some operators realize they will need to bring their machines online in the near future to remain competitive. Success is a choice, not a chance, and they need to take action now to take back their margins. Instead of constant trial and error, follow the disciplined approach outlined here to arrive at an effective implementation.

As trailblazers such as Scott Meskin of Black Tie Services have discovered, “I believe all of this, whether it’s forecasting or telemetry, this is not something you try. This is something you have to be dedicated to do. It’s something that’s very easy for you to just walk away from if you’re not dedicated. After the time and the investment, you want to make sure that your people are trained and that everybody has the same goal — to be 100 percent prekitted or 100 percent forecasted or whatever.”

No one needs to feel alone on their technological journey. Industry veterans are here to help, offering active field support and providing ongoing consultative guidance from start to finish.